Traders on the NYSE floor, October 21, 2022.
Source: New York SE
Shares fell Tuesday, giving up earlier gains, as concerns like rising interest rates and high inflation that weighed on the market last year continued to worry investors in the new year.
The S&P 500 fell 0.52%, slipping off the day’s highs as December’s manufacturing index fell at its fastest since May 2020. The Dow Jones Industrial Average fell 102 points, or 0.29%, and the Nasdaq Composite lost 0.86%.
shares of Tesla and Apple both slipped, weighing on the broader market and continuing a key theme from 2022 when the tech sector was hit hard as the Federal Reserve hiked interest rates to fight inflation. Tesla fell more than 10% after disappointing fourth-quarter deliveries, and Apple slipped more than 3% on reports it would cut production due to weak demand.
The theme could continue into 2023 as the central bank looks poised to raise interest rates further in the coming months, fueling fears that the US economy could slide into recession.
“A recessionary environment in 2023 could further hurt the performance of technology stocks in the new year as investors’ thirst for value-oriented companies and those with higher profit margins, more consistent cash flows and robust dividend yields would increase,” wrote Greg Bassuk, CEO of AXS Investments New York.
The major averages ended 2022 with their worst annual losses since 2008, breaking a three-year winning streak. The Dow ended the year down about 8.8% and 10.3% below its 52-week high. The S&P 500 is down 19.4% for the year and is more than 20% off its record high. The tech-heavy Nasdaq plunged 33.1% last year.
Of course, brighter days may lie ahead. History also shows that the US stock market tends to recover after years of decline. In fact, the S&P 500 has rallied an average of 15% over the next year after losing more than 1% in one year.
Investors will receive a bundle of data in the first trading week of the year that will provide further information on the economic situation.
Wednesday is a big day as the Job Openings and Labor Turnover Survey, better known as JOLTS, is released in the morning and minutes from the Fed’s last monetary policy meeting are released in the afternoon.
They also look forward to Friday’s December jobs report, the final jobs report that the Fed has to review before its next February 1 meeting. Several Fed President speeches are also scheduled for Thursday and Friday.
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